KDDI Q1 operating profit to fall 10 pct -Nikkei

TOKYO, July 19 (Reuters) - Japan's No.2 phone company, KDDI Corp (9433.T: Quote, Profile, Research, Stock Buzz), is likely to post a fall of about 10 percent in quarterly operating profit from a year ago, hurt by cancellations of mobile phone services, the Nikkei business daily said on Saturday.

KDDI, which competes with NTT DoCoMo Inc (9437.T: Quote, Profile, Research, Stock Buzz) and Softbank Corp (9984.T: Quote, Profile, Research, Stock Buzz), is likely to report an operating profit of about 125 billion yen to 129 billion yen ($1.17 billion to $1.21 billion) for April-June, the daily said without citing sources.

KDDI has been battling sluggish sign-ups for its "au" mobile phone services at the same time that it faces rising marketing costs and continued losses on its fixed-line phone business.

The company will probably keep its annual outlook for an 11 percent operating profit rise to 443 billion yen for the year to March 2009, the paper said. ($1=106.95 Yen) (Reporting by Mayumi Negishi; Editing by Clarence Fernandez)